Speaking to Nhan Dan Newspaper, Dr Nguyen Quoc Viet, a public policy expert at the University of Economics and Business under Viet Nam National University, Ha Noi, offered in-depth analysis of this transition, emphasising breakthroughs in macro-governance thinking and unlocking the value of “new means of production” and mechanisms for risk acceptance to build a self-reliant and integrated economy.
The limits of old growth model
Q: Viet Nam has gone through 40 years of Renewal (Doi Moi) with impressive economic milestones. How has Viet Nam’s development model changed over the past 40 years?
A: Looking back at 40 years of Doi Moi (1986-2026), Viet Nam’s economic development model has gone through transformations across historic stages, producing different outcomes in terms of their impact on national economic growth.
From 1986 to the period before Viet Nam joined the World Trade Organisation (WTO) in 2006, Viet Nam’s economic model shifted from a “centrally planned economy” to a “market economy” and basically unleashed productive forces. During this period, Viet Nam focused on abolishing the subsidy mechanism; recognising the existence of multiple economic sectors; implementing production contracts, known as Khoan 10; and opening border trade. This stage helped Viet Nam definitively resolve the shortage of consumer goods and become one of the world’s major agricultural exporters.
From 2007 to 2025, Viet Nam’s growth model was based on expanded exports, capital scale, labour, and foreign direct investment (FDI) attraction. After joining the WTO in 2007, Viet Nam became one of the world’s most open economies in terms of trade, with the import-export-to-GDP ratio maintained at 166%-170%. The main driver came from capital accumulation for the development of the processing and manufacturing industry, which accounted for 32%-35% of gross domestic product (GDP), with a focus on FDI investment. As a result, the processing and manufacturing industry became the leading driver, contributing 31.49% to total added value in 2025, while the index of industrial production (IIP) increased 11.4% in the first half of 2026.
The growth models Viet Nam has implemented were suitable for each period. However, by now, this model has reached its limit as it has pursued gross export indicators.
Signs that structural limits have been reached include the following:
First is the low value-added trap. Viet Nam is compressed at the bottom of the “Smile Curve”, where outsourcing and assembly generate very thin domestic value added (DVA). The foreign value added (FVA) ratio in exports remains high, at 48%-50%.
Another issue is the emergence of “FDI oases”; although the FDI sector accounts for more than 73%-77% of export turnover, backward linkages with domestic private enterprises remain very weak, with only about 18% of domestic enterprises connected to global value chains (GVCs).
Finally, capital use efficiency is low and total factor productivity (TFP) is declining. Analysis shows that the incremental capital-output ratio (ICOR) remains high, at 5.8-6.43. This means that about 6 VND of investment capital is needed to generate 1 VND of additional GDP, while the contribution of TFP over the past decade has increased by only about 0.9% per year on average. At the same time, the room provided by our raw “golden population” advantage is gradually running out.
Viet Nam’s development model will fundamentally shift from “extensive development” to “intensive development”, taking knowledge, creative labour, digital transformation, green transition, and higher domestic value added as its foundation.
Dr Nguyen Quoc Viet
Therefore, from 2026 onwards, as Viet Nam enters a new era of development, we need a new development model suited to the domestic economic situation. Resolution No. 19-NQ/TW (dated July 28, 2026) of the third plenum of the 14th Party Central Committee, on renewing Viet Nam’s development model, has indicated that Viet Nam must shift towards an endogenous, self-reliant model based on productivity, science and technology, and domestic value added (DVA). This model will fundamentally move from “extensive development” to “intensive development”, taking knowledge, creative labour, digital transformation, green transition, and improved DVA in global value chains as its foundation.
Core breakthroughs in institutional thinking
Q: Resolution 19 is a “pivotal revolution” in Viet Nam’s development institutions on the path towards 2045 and the vision to 2130. In your view, what are the breakthroughs in the development model under Resolution 19?
A: Resolution No. 19 has truly created a revolutionary turning point in development thinking. Its most fundamental breakthroughs include:
First, a breakthrough in macro-governance indicators. We are changing the measurement unit for growth quality. Instead of pursuing gross export turnover or the number of registered FDI projects, macro-governance needs to be oriented towards DVA and the value-added export ratio, or VAX index, thereby improving TFP efficiency and net disposable income (NDI). The core spirit is that we do not need to export more at all costs but need to create and retain more value in each unit of product.
Second, a breakthrough in new means of production. Resolution 19 regards “data” and “intellectual property” as core drivers. For the first time, the resolution officially upgrades digital data and intellectual property (IP) into principal means of production and foundational infrastructure for new productive forces. Therefore, the breakthrough direction is to increase knowledge content and digitalisation in key driving sectors, especially industry and services.
Third, a breakthrough in institutional management thinking, shifting from “pre-inspection” to “risk acceptance” and “results-based governance”. The resolution emphasises abolishing the rigid administrative mindset of “ban what cannot be managed”, institutionalising controlled testing mechanisms and policies, known as sandboxes, while accepting risks in science research, innovation, and shifting to post-inspection based on risk data analysis.
“Assetising” data to generate cash flows
Q: As you analysed above, Resolution 19-NQ/TW officially regards “data” as a “new means of production.” How does this fundamentally change the way we value and allocate economic resources compared with traditional means of production such as land, capital, and labour? What breakthroughs are needed in Viet Nam’s financial and intellectual property institutions for data to truly become a cash-generating resource?
A: Officially recognising “data” as a new means of production fundamentally changes the theory of resource allocation. The difference stems from its economic nature, as traditional means of production such as land, capital, and raw labour are physically limited, rivalrous in consumption, and follow the law of diminishing marginal returns.
By contrast, data is non-rivalrous, can be reused indefinitely at zero marginal cost, and follows the law of increasing marginal returns thanks to network effects. Data is the raw material and fuel for operating AI, automation, and smart supply chains.
Therefore, the financial and intellectual property institutional breakthroughs needed for data to generate cash flows should first emphasise legal recognition and the “assetisation” mechanism for data and IP. The new development model will allow data, software, and patents to be valued and recognised as lawful assets on corporate balance sheets. On that basis, enterprises can use data and IP to contribute capital to establish businesses, as collateral for bank loans, or to issue bonds.
The Ministry of Finance and the State Bank of Viet Nam need to issue accounting standards and methods for valuing cash flows generated by data, known as a data valuation framework. It is also necessary to establish a transparent data exchange, coupled with improving the Data Law and mechanisms for protecting privacy and cybersecurity, so that data can circulate safely among the state, enterprises, and financial institutions.
Establishing a sandbox corridor and risk governance
Q: Innovation always comes with risks. The resolution’s introduction of the concept of “risk acceptance” into the implementation of science and technology management mechanisms and its encouragement for localities to pilot “controlled testing” are important steps. How can Viet Nam build a legal corridor that can “accommodate risks”, protecting those who dare to think and act while still governing systemic risks?
A: In innovation, risks and failures are natural attributes. If we apply the administrative pre-inspection mindset of “preserving state capital” to R&D activities and new business models, we will completely eliminate the motivation for innovation.
To establish a legal corridor that can “accommodate risks”, Viet Nam needs to synchronously implement the following mechanisms.
It is necessary to institutionalise and legalise the sandbox mechanism in the Law on Science, Technology and Innovation. Accordingly, clear boundaries should be defined in terms of: space, such as pilot areas; time, for example one to two years; and the scale of participating customers for trials of new technologies, including AI, fintech, digital assets, and smart logistics. Within the sandbox, enterprises would be exempted from some compliance obligations under current regulations.
In innovation, risks and failures are natural attributes.
Dr Nguyen Quoc Viet
Legal boundaries should be defined between objective failure and deliberate profiteering, on that basis protecting civil servants and scientists according to process. If the testing process strictly follows public and transparent procedures and involves no corrupt motives or personal gain, failure to achieve the expected outputs should be regarded as an acceptable investment cost of R&D.
At the same time, it is necessary to shift to risk-based ex-post regulation. Instead of requiring enterprises to apply for prior approval through many steps and stages, they should be allowed to self-declare and implement projects. Regulatory agencies would supervise through automated algorithms and real-time data, intervening only when indicators exceed permitted systemic risk thresholds.
Unleashing new productive forces and mastering technology
Q: The resolution sets the goal of strongly developing “new productive forces” based on AI, semiconductor technology, new materials, and mastery of strategic technologies. If these forces are strongly developed, what breakthroughs will they create for the national economy?
A: If these new productive forces are unleashed at the right scale, Viet Nam’s economy will create decisive breakthroughs. Viet Nam will break through the low value-added trap and reverse the “Smile Curve” in export value chains, helping the country escape the fate of downstream outsourcing. Mastering chip design technology, AI embedded software, and advanced materials will raise the DVA ratio in industrial exports from the current level of around 50% to more than 65%-70%, directly turning gross export turnover into real national income for the country.
If these new productive forces are unleashed at the right scale, Viet Nam’s economy will create decisive breakthroughs.
Dr Nguyen Quoc Viet
The new growth model will solve the problem of double-digit GDP growth of 10% per year through TFP without causing macroeconomic risks. The World Bank has pointed out that if relying only on capital accumulation (K) to achieve 10% GDP growth, the social investment rate would have to reach 49% of GDP, an unfeasible scenario that would trigger an explosion of bad debts and asset bubbles. New productive forces based on AI and strategic technologies are the only key to raising TFP’s contribution to growth to more than 60%, reaching TFP growth of 1.8%-2.0% per year, helping the economy grow rapidly yet sustainably and at low capital cost.
Finally, the new growth model will eliminate the phenomenon of “FDI oases” and build a team of domestic private enterprises. New productive forces could help purely Vietnamese private enterprises improve their capacity to absorb and co-create technology. From there, Vietnamese enterprises would no longer merely act as auxiliary processors of packaging and cartons but would be able to rise to become Tier-1 suppliers and original design manufacturer (ODM) partners of global corporations, ending their economic isolation and creating a self-reliant foundation for the country.
The system of goals and vision of Resolution 19-NQ/TW reflects long-term, strategic, and synchronous development thinking. Renewing the development model is not limited to changing simple economic indicators but represents a comprehensive reform, transforming the way the country operates towards self-reliance, based on knowledge, science and technology, innovation and a people-centred approach. I believe that with the new development model, Viet Nam will continue to achieve the two centennial goals set by the Party and State.
Reporter: Thank you very much.
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